Jackson Financial Inc

We manage our business through three segments: Retail Annuities, Institutional Products, and Closed Life and Annuity Blocks. We report certain activities and items that are not included in these segments, including the results of PPM Holdings, Inc., the holding company of PPM, within Corporate and Other. The following tables and discussion represent an overall view of our results of operations for each segment.

Pretax Adjusted Operating Earnings by Segment

The following table summarizes pretax adjusted operating earnings (non-GAAP) from the Company's business segment operations and also provides a reconciliation of the segment measure to net income on a consolidated U.S. GAAP basis. Also, see Note 3 - Segment Information of the Notes to Condensed Consolidated Financial Statements for further information regarding the calculation of pretax adjusted operating earnings:

Retail Annuities

The following table sets forth, for the periods presented, certain data underlying the pretax adjusted operating earnings results for our Retail Annuities segment. The information contained in the table below should be read in conjunction with our Condensed Consolidated Financial Statements and the related notes appearing elsewhere in this report:

The following table summarizes a roll-forward of activity affecting account value for our Retail Annuities segment for the periods indicated:

Pretax adjusted operating earnings increased $104 million to $458 million for the three months ended September 30, 2024, from $354 million for the three months ended September 30, 2023, primarily due to:

•$90 million increase in fee income primarily due to higher average separate account values compared to the prior year quarter; and

•$88 million increase in spread income primarily due to $86 million higher investment income and $2 million lower interest credited on contract holder funds compared to the prior year quarter. Investment income was driven by higher income on bonds due to higher asset balances earning higher yields in 2024, compared to the prior year quarter, partially offset by higher investment expenses related to repurchase agreements.

•$84 million increase in operating costs and other expenses, net of deferrals, primarily due to higher asset-based non-deferrable commissions, due to higher account values during the three months ended September 30, 2024, compared to the prior year quarter, and an increase in incentive compensation expenses during the three months ended September 30, 2024.

Pretax adjusted operating earnings increased $304 million to $1,342 million for the nine months ended September 30, 2024, from $1,038 million for the nine months ended September 30, 2023, primarily due to:

•$298 million increase in fee income primarily due to higher average separate account values compared to the prior year period; and

•$221 million increase in spread income primarily due to $197 million higher investment income driven by higher income on bonds driven by higher asset balances earning higher yields in 2024, compared to the prior year period, partially offset by higher investment expenses related to repurchase agreements, and $24 million lower interest credited on contract holder funds compared to the prior year period.

•$220 million increase in operating costs and other expenses, net of deferrals, primarily due to higher asset-based non-deferrable commissions, due to higher account values during 2024, and an increase in incentive compensation expenses during the nine months ended September 30, 2024.

Retail annuities account value, net of reinsurance, increased $38.2 billion over the prior year period primarily due to positive variable annuity separate account returns driven by favorable market performance in 2024, as well as positive RILA and fixed annuity net flows over the period.

Institutional Products

The following table sets forth, for the periods presented, certain data underlying the pretax adjusted operating earnings results for our Institutional Products segment. The information contained in the table below should be read in conjunction with our Condensed Consolidated Financial Statements and the related notes appearing elsewhere in this report:

The following table summarizes a roll-forward of activity affecting account value for our Institutional Products segment for the periods indicated:

Pretax adjusted operating earnings decreased $4 million to $17 million for the three months ended September 30, 2024, from $21 million for the three months ended September 30, 2023, primarily due to a $4 million decrease in spread income primarily due to $8 million lower investment income, partially offset by $4 million lower interest credited on contract holder funds.

Pretax adjusted operating earnings increased $30 million to $77 million for the nine months ended September 30, 2024, from $47 million for the nine months ended September 30, 2023, primarily due to a $30 million increase in spread income primarily due to $35 million higher investment income, partially offset by $5 million higher interest credited on contract holder funds.

Institutional product account value decreased from $8,712 million at September 30, 2023, to $7,929 million at September 30, 2024. The decrease in account value was driven by continued maturities of the existing contracts and funding agreements.

Closed Life and Annuity Blocks

The following table sets forth, for the periods presented, certain data underlying the pretax adjusted operating earnings results for our Closed Life and Annuity Blocks segment. The information contained in the table below should be read in conjunction with our Condensed Consolidated Financial Statements and the related notes appearing elsewhere in this report:

Pretax adjusted operating earnings increased $1 million to $7 million for the three months ended September 30, 2024, from $6 million for the three months ended September 30, 2023, primarily due to a $12 million decrease in death, other policy benefits, and change in policy reserves, net of (gain) loss from updating future policy benefits cash flow assumptions, primarily due to lower other policyholder benefits, partially offset by an $8 million decrease in premiums.

Pretax adjusted operating earnings increased $68 million to $61 million for the nine months ended September 30, 2024, from $(7) million for the nine months ended September 30, 2023, primarily due to:

•$62 million decrease in death, other policy benefits, and change in policy reserves, net of (gain) loss from updating future policy benefits cash flow assumptions, primarily due to improved mortality and lower other policyholder benefits; and

•$24 million decrease in interest credited on contract holder funds related to persistency bonuses in 2023.

•$22 million decrease in premiums as the closed block of life business continues to run off.

Corporate and Other

Corporate and Other includes the operations of PPM Holdings, Inc., the parent holding company of PPM, and unallocated corporate revenue and expenses, as well as certain eliminations and consolidation adjustments. The following table sets forth, for the periods presented, certain data underlying the pretax adjusted operating earnings results for Corporate and Other. The information contained in the table below should be read in conjunction with our Condensed Consolidated Financial Statements and the related notes appearing elsewhere in this report:

Pretax adjusted operating earnings decreased $45 million to $(71) million for the three months ended September 30, 2024, from $(26) million for the three months ended September 30, 2023, primarily driven by a $33 million increase in operating costs and other expenses, net of deferrals, due to increased deferred and incentive compensation expenses during the three months ended September 30, 2024 and a $14 million decrease in net investment income.

Pretax adjusted operating earnings decreased $91 million to $(207) million for the nine months ended September 30, 2024, from $(116) million for the nine months ended September 30, 2023, primarily driven by to a $36 million decrease in net investment income, a $35 million increase in operating costs and other expenses, net of deferrals, due to increased deferred and incentive compensation expenses, and a $27 million decrease in other income primarily due to a one-time reinsurance related adjustment.